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I have never heard a principal of a real estate business say they are satisfied with the performance of their business. It is an industry driven to always strive to do things better, to always strive for more [one of the reasons I love working in the real estate industry so much].
One area which never seems to get enough attention though is staff mix. It is easy to focus on top line income and commission structure [they are both very important] but staff mix is a hidden driver of profitability in your business. I always harp on about knowing your average rate of commission because it is the indicator of performance that pulls together so many factors. If you have different commission rates payable depending on individual performance, you also need to be aware of your staff mix.
We have all heard warnings about not having too many gorillas in the office. They can be great for market share and brand awareness but many times I have seen their strength and confidence build so much they start to have a negative impact on culture. When this happens, trouble is brewing! Often, the first sign is a salesperson coming to the principal and saying something like this;
“Gees I have had a good month/quarter/year, probably time to start looking at increasing my commission rate. I am such a big part of this business now.”
Don’t get me wrong, gorillas can be great for an office. But when a business becomes too reliant on one or two big gorillas, it can undermine the stability of the business and comradery of the team. You also need some chimps and monkeys.
I have seen it all, from the pyramid to the hourglass. There is no one right structure but the one I am always uncomfortable with is the upside-down pyramid. When the majority of your team are gorillas on the top of the food chain earning big bucks, you are forever at their beck and call with little back up time developing those behind them.
Understand firstly how much profit you make as a % and $ value from each person. Group them into 3 bands – those that do less than 5% of the office sales, those that do between 5% and 10% and those that do more than 10% of the sales in the office. If you wanted to grow profit, who do you want to do that extra sale? The gorillas on the top commission rate or the monkeys that earn the highest profitability %.
Don’t underestimate the importance of having some chimps and monkeys around the place who do that 1 sale a month. As long as they pay their way, they will be the future of your business.